The Maharashtra Real Estate Regulatory Authority is set to issue a fresh order on the use of the word “co-promoter” in its rules within three weeks. The new set of rules will see Maha RERA use another word as per the Real Estate (Regulation and Development) Act, 2016. It will not use the word “co-promoter” and make the land owner liable only if he/she has shares in a project. If the land owners get area shares or flats in lieu of money, they will be held liable as they would be selling the units. But if they are not involved in the project, there is no question of any liability. As the word “co-promoter” is not in the statute, Maha RERA would have to issue a fresh order stating the new word to be used for the land owners with shares in properties and those who do not, the official added.

What led the Maharashtra Government to implement this step?

Maha RERA had withdrawn its order making land owners equally liable as that of builders and developers as part of the Act and it was submitted as an affidavit in the Bombay high court (HC) last week.

In the petition filed before the Bombay High Court, the validity of the Order was primarily challenged on the ground that Maha RERA was not empowered to introduce any such new term. “The impugned office order is tantamount to legislation,” the petition stated. The respondent (MahaRERA) cannot legislate for the state, much less for the Union.

Could the land owner or the society be held responsible along with the developer. It is good that Maha RERA has withdrawn its earlier order on the issue of co-promoter being liable. The wrong has been corrected.’’

The Karnataka RERA, through its chairman has cautioned the builders and developers throughout the state that they would either have to register themselves mandatorily with RERA or face stringent action. There are approximately 1700 projects registered with the Karnataka RERA Authority, out of which 725 have been approved. The approval of 573 projects has been in progress and the remaining would get the nod after getting additional information. The Chairman also cautioned that the Authority would find out with help of other governmental agencies how many projects are to be registered and those who are unregistered would be severely penalised, to almost 10% of the project cost. The authority has so far received 218 complaints, from the buyers, most of which has been resolved. The authority, which is typically designed to be buyer friendly, is also willing to help the developer or the promoter in case of any issues to be sorted. Would the Developers register themselves or “face the music”?

A Gift Deed is defined under section 122 of the Transfer of Property Act, 1882. As per the provisions, any immovable property can be transferred through a Gift Deed. A gift deed is similar to a sale deed except that no money is paid in the transfer of the property. Like a sale deed, a gift deed too, has to be registered with the sub registrar under section 17 of the Registration Act, 1908, and as per section 123 of the Transfer of Property Act, failing which would render the contract invalid. Registering a gift deed gives it a legal status and establishes the ownership of the property. It also proves that all applicable government dues have been paid. A gift deed cannot be revoked unless there is an agreement between the contracting parties stating that the gift can be revoked on the occurrence of a certain event. Hence isn’t it advised to add a clause of revocation while executing a gift deed in order to avoid glitches? Section 126 of the Transfer of Property Act provides for situations wherein a gift deed may be revoked by the donor.

Section 56 (2) (vii) of the Income Tax Act, 1961, states that a gift is not taxable if it is received by an individual or Hindu undivided family from any blood relative or as inheritance or at the time of marriage or in contemplation of death. But in any other context, if the aggregate of gifts received exceeds Rs 50,000 in a year, then the gift will be taxable as income from other sources. Also, while registering the gift deed different states have different charges on stamp duty. Therefore it is a must that one checks the law of the state with regard to the gift deed, and then proceed towards the registration.

The Central Government, in a move to secure the home buyers of the under constructed property, for which they have paid money and are awaiting completion, has enforced that such Buyers can seek redressal from the Central RERA Act, even if the Developer has commenced the project and failed to deliver the possession of the property, even before the Act was brought into effect. It was recently reported that the Builders in the state of Maharashtra have objected to the existing buildings to be brought under the purview of RERA Act. Nearly 13000 projects have been registered in the state of Maharashtra, have labelled the piece of legislation concerning the ongoing projects as stringent. The case was brought before the Bombay High Court, wherein the Court observed that section 18 of Central RERA Act, makes the Builder liable to return the amounts already received with interest and pay compensation if he fails to complete or give possession. If the buyer opts to withdraw from the project, compensation ought to be paid to him. If the buyer opts to continue with the project, and in the event of delay, he is entitled to interest for every month of delay till the date of possession. In this event, the RERA acts as a facilitator to help the buyer to regain the amount. Does this mean that the original builder is the one who would have to pay the compensation or interest and not the new one?

The advent of RERA and GST has brought in much needed transparency and accountability to the reality sector. The RERA and GST, which is touted to be a buyer friendly legislation, is also acting as a protective guard for the buyers. However, are the buyers aware of their rights and privileges under the RERA and GST? All home-buyers must mandatorily seek the RERA registration number, without which no project can take place in a locality. To achieve this, they ought to visit the RERA website of the respective state or union territory to check if the developer and the project is registered with the regulator. The website of the regulator would inturn disclose all the details related to sanctioned plans, layout, approvals, etc). The title deeds initially did not disclose the carpet area and would merely mention the UDS. With the advent of RERA, a carpet area is also included in the project list as well as would find itself in the title documents. A carpet area according to RERA is the net usable area, which excludes the balcony, verandah and terrace and includes area under internal walls. Developers also ought to mandatorily deposit 70 per cent of collection from customers into a separate account, which will be used for payments towards land and construction cost. The promoters of the project would now have to post quarterly updates of progress of projects on the website for public viewing, which would inturn give the homebuyers a clear idea of the progress of the project. In case of any delay beyond the period of completion and possession, the home buyers would be entitled to a compensation in case the project gets delayed. Additionally, a developer cannot also make any changes in sanctioned plan, without two – thirds buyers’ consent before making changes. In case of any contravention by the Developer, a homebuyer could exercise his option of filing complaints against developers and real estate agents in the consumer court or to RERA authority.

Apart from RERA, GST also passes on certain benefits to the homebuyers. With the advent of GST, a homebuyer is relieved of the complex tax structure such as VAT and Service Tax, which is now replaced with GST at a unified 18% slab. The Developers would get input credit, which would in turn be passed on to the buyers. GST rate on under construction properties is fixed at 12%, whilst the completed and ready-to move-in properties are out of the GST purview.

Therefore, are the ‘consumers’ “king” in reality? If so, would they exercise their kingship?

The advent of RERA and GST, had brought the much-needed accountability and transparency in the otherwise organised Realty Sector. Demonetisation and GST have almost consolidated the realty sector in terms of policies and taxation.

However, there is still much clarity required in the functioning since many states are diluting and doing away with the very essence of this reformed based legislation. There is an urgent need for enabling the single window clearance for real estate projects that would help the developers save a lot of time, money and effort while initiating new projects. Developers are keen on getting a single-window clearance mechanism implemented as it would help them to obtain permissions at one-go on a single platform and complete the projects on time. Would it be an easy task to obtain all simplified legal documents and approvals on a single platform? Why has this issue taken a back seat thereby attributing to the myriad delays in realty sector? Wouldn’t providing a single window clearance provide some respite to the developers and in turn reduce the paperwork and time required for attaining clearances for projects?

Diwali is unlikely to add a shine to the real estate market as realtors expect fewer new launches in the wake of compliance issues with the Real Estate (Regulation and Development) Act, 2016, issues related to Goods and Service Tax and overall sluggishness in the realty market. Developers’ estimate that new launches will not be more than 15%- 20% of the number of projects launched last year.

Many realtors are unable to proceed with their projects and as a result had to postpone the same due to delays in securing approvals, without which a developer cannot register projects with the state-level RERA regulatory authority.

There many others who do not see many projects coming to the market this Diwali. Even on the eve of Dussehra, the number of new launches was less than 10% of new schemes launched last year.

Accordingly apart from the compliance with RERA, there is still confusion among developers and consumers about input tax credit under GST. This coupled with sluggish market conditions has adversely impacted new project launches.

According to developers, there are often delays in granting approvals such as environment clearance, plan passing and conversion of agricultural land into non-agricultural and for any realtor, this process takes around 10 months. Only after getting all these approvals, can one register projects under RERA. Does this means that it is going to be a dull diwali this year, without any new property launches?

The RERA regulation, mandates that every project, which is above 500 square meters or having 8 units, have to be compulsorily and mandatorily registered, in order to advertise the same in any portal. Any project so advertised, would be penalised. Even, for a buyer to obtain loans from Banks, whilst purchasing properties, it is mandatory to quote RERA registration number, or else, the application would be rejected. Considering such factors, it is necessary for every prospective buyer to view the RERA website, in order to arrive at a right decision. What are the information, that would be available to a prospective buyer, in a RERA regulatory authority’s website? They are:

What projects, are available in a particular area or vicinity, i.e. in which area, the prospective buyer decides to invest in, the projects available in those places. Once, the aforesaid option is selected, the entire list of registered projects in the selected area would be displayed.

Details of the Developers of the particular project, so selected would be provided. A prospective buyer can view the pertinent details of the project such as name of the developer along with his address, track record in the market.

In case, a prospective buyer is interested in investing in an under constructed project, it is pertinent to note how many units have been booked and how many are remaining. This information, would be available in the RERA regulator’s website, which would help the prospective home buyer to invest in the right property. This also eliminates the risk of the person being duped by fly by night real estate agents.

A Prospective buyer, can also ascertain from the Regulator’s website, the details of the Developer’s project in the vicinity that he is interested in investing.

A Prospective buyer, can also have an access to complete set of documents relating to the approved plan, building layout, occupancy certificate, carpet area and a clear title, before investing in the particular project.

A Prospective buyer can also have access to sale and resale value of a project, if it is registered with the regulator

A prospective buyer can also check the financial status of a Developer, and can have access to vital information such as the promoters, financiers and lenders to a project.

A prospective buyer can also find out the names of the Real Estate Agents, who are authorised to deal with the particular projects, since the registration of an Agent, has become mandatory.

Would all these factors, solve the issues and dilemma faced by the home – buyers regarding their investment in residential sector? How about the haphazard implementation by various state government? Would the Portals, reveal all the information or is it going to be merely on paper rather than ground?

The Home Loan Industry might dip down deep, this year, since many of the states, are yet to have a proper portal for registration of ongoing and new Real Estate Projects. The builders and developers of the projects, are unable to register under RERA, which has in turn led to lower lending. Not only the Developers, but the buyers are also hit by this haphazard and inefficient system.

What is the reason toward the same? The answer is that the RERA authorities do not have the required infrastructure or support structure. Even in case a Developer is desirous of registering his project, he is unable to do the same, since the authorities are not well – equipped to complete the process.

Another reason towards the fall in amount of home loans is that, the reluctance shown by the customers, who despite finalisation of a deal, refuse to sign sale agreements until the builder gets the RERA registration number, since for a home loan to be granted, a borrower has to necessarily quote the RERA registration number of the Project.

How would the states redress this issue? Why is the RERA implementation haphazard in states and not in uniform manner? How would the union government redress the issue of ‘tweaking concepts’ by many states and bring about uniformity in all the states concerning the implementation of RERA regulations? Would the home loan market, improve in the upcoming financial year?

Finally, TN RERA has woken up from its deep slumber. The TN RERA authorities, have finally taken a cue from its counterpart, Maharashtra, and have decided to penalize the Projects, which have not been registered before July 31st. This was also done in a bid to protect the Developers and the Buyers, who require loans from the Banks in order to construct or purchase the constructed projects, since the Bank Officials, would not lend money to the borrowers, who do not possess the RERA registration number. Therefore, any ongoing project, without TN RERA stamp, would be penalized with effect from August 1st. Around 160 applications were received for ongoing and new projects before July 31st deadline. As of August 2011, 60 more projects were submitted for registration. What would be the amount of penalty? Would the Developers protest to this new awakening? Will TN RERA tweak laws to the Developer’s advantage in future?